Canada to buy major pipeline to ensure it gets built

It isn't "the intention of the Government of Canada to be a long-term owner of this project", Morneau's department said in a statement.

The deal was approved by cabinet on Tuesday morning and is now subject to approval by Kinder Morgan stockholders.

When the sale is finished, Canada will continue construction on its own, with plans to eventually sell it all in the future once market conditions improve. But the federal government, citing past court decisions, including some from the Supreme Court of Canada, contends that it holds sole authority over pipelines between provinces.

The purchase, for 4.5 billion Canadian dollars, ensures that the Trans Mountain pipeline, which carries oil from Alberta to a port in a suburb of Vancouver, British Columbia, will begin a planned expansion this summer.

May said Indigenous rights were not being respected in regards to the permits issued to twin the existing pipeline.

Morneau said more investment would be needed to complete the expansion, and stressed he felt the project should be returned to the private sector.

Analysts have said China is eager to get access to Canada's oil, but largely gave up hope that a pipeline to the Pacific coast would be built.

The B.C. government is carrying on with its reference case against the Trans Mountain pipeline expansion, Premier John Horgan told Prime Minister Justin Trudeau in an early-morning phone call Tuesday.

But many indigenous people see the 620 miles (1,000 kilometers) of new pipeline as a threat to their lands, echoing concerns raised by Native Americans about the Keystone XL project in the U.S. Many in Canada say it also raises broader environmental concerns by enabling increased development of the carbon-heavy oil sands.

Kinder Morgan, the company behind the pipeline, suspended non-essential spending on the project in April.

Although the federal government has taken stakes in struggling energy projects, Tuesday's announcement marked the first time Ottawa has bought an entire pipeline. The 980-kilometre (600-mile) expansion is seen by the oil industry as a crucial link to Asian markets, allowing producers to diversify away from the US, which takes the vast majority of Canadian oil exports.

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He declined to say what construction costs would be for the expansion project, and downplayed concerns about finding a new buyer. Morneau said there'd be no fiscal impact of the plan - suggesting he doesn't expect to make or lose money on the deal.

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